Asian and Australian shares dived on Monday amid a new bout of the US-China slugfest that has been dominating the markets in recent months.

Markets were seemingly not encouraged by words out of Beijing claiming “calm negotiations” were the path toward finding a resolution.

Hong Kong saw the most downward action, with the Hang Seng down 3% in afternoon trading. Meanwhile, Japan’s Nikkei was 2% lower, the Shanghai Composite 1.3% lower, and the ASX200 index closed 1.27% lower.

Donald Trump’s decree ordering US companies to pull out of China may have drawn mockery online, but was a factor in a  series of tit-for-tat shots fired from both sides that led to market slides.

The Chinese government announced tariffs of $75bn on US goods coming into China, with the US president immediately retaliating by promising another raise of 5% on $259bn worth of Chinese imports, up to 30% starting in October.

The Chinese yuan hit an 11-year low, and the AUD also fell 0.4% to $0.6732.

In Australia, no sector was spared. Energy shares fell 2.91%, tech shares fell 2.82%, and industrial, financial, staple, healthcare and telecoms sectors were also down.

Banks also felt the burn, with four major players down between 1.55% and 2.52%.

The gloom comes amid rising belief in some quarters that the negative impact the trade war is having on share prices across the world will not influence the US president to reverse or soften his stance.

The longer the standoff continues, the more difficult and politically costly it may become for either side to retreat.

Liu He, who is the vice premier of China, tried to allay fears on Monday, saying that a resolution was possible through “calm negotiations” – but his words were not matched with actions from either side and seem to have fallen on deaf ears as markets looked to the reality on the ground.

It remains to be seen how long the standoff can continue, and how much further markets can withstand this sort of downward pressure before something gives.

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